We are interested in knowing how cells of a single organism can differentiate to form specific tissue types. We have chosen to address one aspect of the question by learning how one gene, the cut locus of Drosophila malenogaster, is expressed differently in different tissues of the fly. The analysis of a number of mutants of the cut locus suggests that there are at least two regions of the gene, each of which is necessary for gene activity in a limited and nonoverlapping set of tissues. Another region is possibly necessary for expression throughout the fly. The availability of tissue specific mutants of a gene afford the opportunity to experiment to find out how the gene normally operates in tissue specific ways. We are currently studying the transcriptional activity of the cut locus and the DNA structure of normal and mutant alleles with the intention of finding out what causes the mutations and how the activity is altered. We now know that many of the cut mutants are insertions of retrovirus-like sequences into the cut locus DNA, and we are interested in understanding the affect of these sequences on gene activity.